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Tax Facts

By @ 04/15/15 in Blog

Today, April 15th, is Tax Day across America, the last day for US citizens to file and pay the federal, state and local taxes on their income. Not everyone likes it, but almost every employed citizen has to do it.

The US government collects taxes so it can fund the many programs that help keep Americans safe, happy, and healthy. Federal taxes pay for national defense and public roads. State taxes support public schools, health programs, and public safety.

So let’s learn a little bit more about this very taxing day!

  1. The income tax was expressly forbidden by the US Constitution in Article 1, Section 8: No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken. Translated, this means that any tax levied by the Federal government must be divided among the states based upon their population.
  2. The IRS was first known as the BIR (Bureau of Internal Revenue).
  3. The income tax was first introduced by Congress and signed into law by President Lincoln in 1861 to pay for the immense costs of the Civil War.
  4. The first income tax was a flat rate of 2% on all income above $800, which, based on inflation rates would be about $19,000 today. How much would the tax burden be on that amount?
  5. The first federal income tax lapsed in 1872 because, absent the costs of fighting a war, Congress no longer saw the need.
  6. The first peacetime income tax was introduced in 1894 at a flat rate of 2% on individual income over $3,000. One year later, arguing Article 1, Section 2 of the Constitution, the Supreme Court struck it down.
  7. 7. Congress proposed an income tax amendment to the Constitution in 1909 to avoid future Supreme Court battles.
  8. The 16th Amendment, establishing a federal income tax, was ratified in 1913. The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.
  9. Taxes first began being withheld from individual paychecks in 1943 with passage of the Current Tax Payment Act.
  10. Tax returns were originally due on March 1st.  The date was changed to April 15th to allow the IRS more time to process the mountains of returns submitted each year.

Can you guess to which government – federal, state or local – tax dollars go to support the following programs?

  • Interstate highways
  • Libraries
  • International Space Station
  • Garbage collection
  • Smithsonian museums
  • Public high schools
  • Household water and sewer systems
  • Police
  • Military
  • Recreation Centers

Other important events on April 15th:

  • President Lincoln died, 1865.
  • The Titanic sank, 1912
  • President Truman signed the Japanese Peace Treaty, ending World War II, 1952
  • Mickey Mouse went to Asia when Disneyland opened in Tokyo, 1983.